Weighing the Tax Breaks and Benefits of Going Back to School
It’s back to school time, but for many people a full-time course load involves working a 9 to 5 career with little room for advancement. There is always room to grow, but many large companies want to see an “M” with that “BA”. If going back to school seems like a pipe dream, it might be worth it to crunch some numbers. In the long run, going back to school might just give you a better shot at landing your dream job, or at least adding more zeros to that pay cheque.
And going back to university isn’t as expensive as people think. Students get more tax benefits then just books and tuition. Both moving expenses and childcare expenses are tax deductible, so be sure to save all those receipts. There are also several non-refundable tax credits at a student’s disposal. For example, if a student pays $500 a year on public transit they’ll get $75 back ($500 x 15%), depending on their tax bracket. This also applies to interest paid on student loans and the Canada employment amount filed on the tax return. Scholarships, fellowships or bursaries are also not taxable and not reported as income on your tax return — This only applies to full-time students.
There is also a tax break just for enrolling as either a full-time or part-time university student. Classified as the “Education amount”, students can claim $400 (full-time) or $120 (part-time) multiplied by the total number of months attending school. Of course there are plenty of provisions on exactly how much a student can qualify for. That’s why there’s a Hawkings Epp Dumont advisor to help you figure it out. Despite the multiple tax benefits, it’s important to know exactly which benefits will apply.
Going back to university to advance your career with a postgraduate degree even has family tax benefits. Students who don’t need to claim their tuition or education amounts to reduce their provincial income tax to zero can transfer some or all of it to parents, grandparents, partner/common-law/spouse, or a partner/common-law/spouse’s parents or grandparents. However, there are stipulations about carrying this forward.
Make sure to be as detailed as possible about your post-secondary plans with your Hawkings Epp Dumont advisor. For example, tuition tax credits don’t apply to students who are upgrading for entry into a university or college program. But don’t count out going back to school just yet, it might be in your best interest and your tax return.